President Donald Trump has shifted his focus back to sanctions in a bid to end the war with Iran, after months of military strikes that, the administration now argues, have pushed Iran towards financial collapse. Trump said on Monday that, as part of any peace process, Iran is seeking compensation. He indicated the United States would demand the same, framing economic pressure as the next step after bombing and other attacks began on Feb. 28. The comments followed a broader push over the weekend to argue that Iran is approaching a tipping point financially, despite having faced sanctions for decades. Economic squeeze as next phaseTrump’s administration expects that heightened financial pressure will force Iran’s leadership to agree to end its nuclear programme and fully reopen the Strait of Hormuz to oil and natural gas tankers. The Strait is central to global energy shipping, and the US has treated it as a key pressure point in negotiations. In remarks to reporters, Trump said Iran was running out of money, adding that it was not paying its soldiers and citing inflation at 300%. Administration estimates have varied, and the Iranian economy has already been hit hard by the conflict. The move comes as US stockpiles of certain weapons have diminished and as stop-start talks have again stalled. Trump has continued to argue that pressure can still produce a breakthrough. Oil prices jump on Hormuz expectationsCrude oil prices rose on Monday as investors interpreted Trump’s comments as a sign that fewer ships would move through the Strait of Hormuz. The Iran war has largely shut the waterway used to ship about 20% of global oil supplies, disrupting flows of gasoline, jet fuel and natural gas. Efforts to reopen the strait have been brief, and it has become a source of leverage in negotiations with Iran. However, Iran has not shown signs of being deterred by the prospect of further sanctions. Esmail Baghaei, a spokesman for Iran’s Foreign Ministry, said on social media that when Washington fails to pursue diplomacy it turns to sanctions, and when sanctions do not achieve results they are increased. He warned that the main risk was American policymakers “strangling” their own chances of an exit that avoids humiliation. “Operation Economic Fury” and limitsThe White House has labelled the latest sanctions effort “Operation Economic Fury”. Since April 16, the US has been implementing measures described by Treasury Secretary Scott Bessent as the “financial equivalent” of a bombing campaign, with actions targeting countries that buy Iranian oil or handle related banking. Bessent and other officials have argued the approach can increase pressure by restricting Iran’s access to revenue and financial channels. But some analysts say sanctions take time to take effect and cannot match the speed of a blockade or strikes. Richard Nephew, a senior research scholar at Columbia University who helped shape Iran sanctions policy during the Obama administration, said the limits of sanctions as a warfare tool are clear. He also argued that Trump has not laid out consistent strategic goals for the war, pointing to shifting emphasis across different objectives such as denying Iran a nuclear weapon, pressuring the Strait of Hormuz, and referencing ballistic missiles. Juan Zarate, a deputy national security adviser during the George W. Bush administration, said the US still holds leverage through sanctions aimed at third-party countries and an ongoing US naval blockade of Iranian ports. But he cautioned that the impact would depend on how far Washington is willing to go and whether it maintains patience while testing whether economic pain changes Iran’s behaviour. War costs, Iran’s downturn and US politicsTrump’s shift also reflects a reversal from his earlier criticism of sanctions used by previous presidents. Last week, he defended the military campaign that began on Feb. 28 and argued that earlier sanctions reaching back to the late 1970s had not succeeded. Iran has suffered economically during the conflict, with the International Monetary Fund estimating the overall economy will shrink by 5.4%. Iran’s government has reported annual inflation of 88.6%. US Treasury data says average Iranian oil loadings fell from about 1.8 million barrels per day before the war to under 500,000 barrels per day over the past month. While the US economy has continued to grow, inflation remains elevated and borrowing costs have risen, contributing to criticism of the war domestically. A senior US official, speaking on condition of anonymity to discuss strategy, said the US military has set back Iran’s ability to produce, sell and ship oil and other energy resources. The official said the administration views the combination of the strait blockade and sanctions as effective, and believes further options may be available in the weeks ahead. At a joint appearance on Monday, Defense Secretary Pete Hegseth said the US has a “most powerful economy” and that the Treasury has tools to apply pressure. Join the discussion? 12 August 2026
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